Wednesday, November 7, 2018

International buyers boost overall U.S. investment volume

Commercial real estate investment volume rose 17.4% year-over-year to $152.7 billion in Q3. Total year-to-date investment was $394.2 billion, a sizable increase of 10.6% from the first three quarters of 2017.

Excluding entity-level transactions, which is a better way to gauge the velocity of transactions, year-to-date investment volume was still up by 5.5% from last year to $351.6 billion and Q3 volume was up by 6.8% year-over-year to $122.8 billion.

Greater New York, Greater Los Angeles and the San Francisco Bay Area attracted the most investment in Q3, accounting for 24.5% of all acquisitions. The top-15 markets accounted for nearly 61.4% of total Q3 investment volume.

Industrial, hotel and multifamily cap rates decreased modestly year-over-year in Q3, while office and retail cap rates were essentially unchanged. Industrial cap rates remained lower than office for the fourth consecutive quarter, a new record.

Pricing for all property types except retail is at an all-time high, with mild deceleration in recent months. Increases in multifamily and office pricing continue to lead the national index, while industrial continues to have decelerating growth.

Overall, commercial mortgage production year-to-date is slightly softer than in 2017, with combined CMBS and GSE lending down by 3%. CBRE’s Lender Momentum Index is up 13.1% year-over-year.